Fed confident US unemployment easing, minutes say

COST-CUTTING MOVE:While the Fed cut its stimulus measures on an upbeat outlook for the jobless rate, department store Macy’s announced it was eliminating 2,500 jobs

AFP, WASHINGTON and NEW YORK

The US Federal Reserve was confident unemployment would continue to fall even if it cut its huge monetary stimulus, according to the minutes of last month’s policy meeting released on Wednesday.

“Most members agreed that the cumulative improvement in labor market conditions and the likelihood that the improvement would be sustained indicated that the Committee could appropriately begin to slow the pace of its asset purchases at the meeting,” the minutes of the Federal Open Market Committee’s Dec. 17 to Dec. 18 meeting said.

“Most had become more confident” that labor market conditions would continue to improve, the document said.

The panel voted 9-1 to begin tapering the massive stimulus this month, reducing the central bank’s asset purchases by US$10 billion to US$75 billion a month. However, some participants expressed concern about slowing the pace of purchases when inflation was running well below the Fed’s objective and “considerable slack” remained in the labor market.

Many participants said the Fed “should proceed cautiously” in reducing the easy-money program that has kept long-term interest rates low, supporting growth and fueling gains on the stock market.

Some favored a larger reduction in purchases at last month’s meeting and future reductions that would bring the program to an end “relatively quickly.”

Paul Edelstein of IHS Global Insight said the Fed minutes showed that while the outlook for the economy had not materially improved, “confidence in that outlook did,” allowing most of the officials to support the taper.

However, US department store giant Macy’s said on Wednesday it would eliminate 2,500 jobs as a cost-cutting move, equivalent to about 1.4 percent of its workforce.

The move is part of an initiative to “sustain profitable sales growth in the years ahead,” Macy’s said in a statement after the market closed.

Macy’s expects to save US$100 million a year through the moves starting this year and it will take between US$120 million and US$135 million in cost-cutting charges.

Macy’s employs about 175,000 staff.

Macy’s plans to close five stores, but it also plans to open five new Macy’s stores and three new stores of its upscale Bloomingdales chain.

Macy’s operates about 840 department stores in the US.

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